The Republican. [volume] (Oakland, Md.) 1877-current, 1887-10-29
BUSINESS TERMS.
Definitions and Explanations of Those in
Common Use.

definitions and Explanations of Those in
Common Use.
Some of the business terms used in
the published accounts of some of the
recent failures have puzzled a good
many people outside of the business
world. The words used to designate
certain commercial paper have not
carried with them sufficient evidence of
their meaning to make it clear to the
uninitiated. Here are few defini-
tions that may be useful:
Business Paper This is the ordin-
airy paper used by business men, an
ordinary note, for instance. B owes A
debt. B gives A a note for it, and A
takes the note to the bank and gets il
discounted. That is a fair sample of
legitimate business paper.
Accommodation Paper" is
paper upon which loans from banks
and the like are effected. Forinstance,
A is in business and has not enough
capital at hand wherewith to operate.
His credit is good, and he goes to Il
bank and explains that he wants to
raise this or that amount of money. He
gives his note for the amount, and the
bank takes this either with or without
endorsement, or with or without col
lateral security. A mans credit has
considerable to do with his ability to
float his accommodation paper.
~ d
used by bank men merely to indicate
that the paper, of whatever nature it
may be, is first class.
Kite Paper" Perhaps this is best
defined by an example. A New Haven
firm is in need of funds and so is a Hart
ford firm. They both have good credit.
The New Haven firm sends to the Hart
ford firm for its note, for say $4,000,
and the Hartford firm sends the note and
gets in return the New Haven firm s
note for the same amount. There is no
actual consideration in either case. The
Hartford firm gets its note discounted,
and so does the New Haven firm, and
then they have raised 5000 ''in wind"
of course providing they turn out insol-
vent. This is one form of ''kite paper"
Another form, and worse one, is
where n house with Il big line of credit
starts up a concern in some distant city
or State for the mere purpose of manu-
featuring paper which the house itself
can raise money on. For instance, A
does a big business in New Haven
and has large line of credit. He has
one of these paper manufacturing
houses in Milwaukee. This house sends
him note for $4,000, in payment
for goods ostensibly. The note is dis
counted in New Haven. The money
is raised at an opportune time, and all
is well unless the firm goes up. Then
this form of kite paper" is nothing
short of absolute swindling.
Trust Receipt"-Hereis an example
of a trust receipt transaction which
will serve as definition. A wants to
import a cargo of iron hut has not the
money to do it with. He goes to B. a
banker, and says: IF you import that
cargo of iron Tor me, | will have it
shipped to your order and will not part
with it without your consent, and when
l do part with it the proceeds will be
turned over to you" The iron is
shipped to AS warehouse. The COM
munications between A and B relative
to the transaction and their agreement
are the trust receipts. II A should
prove insolvent the question is, who
does the iron belong TOP" In New
York it has been decided that it is AS
In Connecticut one of the most promi-
nent lawyers in the city said this morn
ing it is as yet an open question.-Ne10
Hayen Register.